Good news for small businesses in Budget 2015
By Jack Newton, Law Graduate, MST Lawyers
An announcement by Treasurer Joe Hockey on Budget night 2015 has made seeking legal advice much more cost effective for small businesses.
The Government announced that new small businesses will be able to deduct professional expenses such as legal fees and accounting fees. This is, however, limited to the costs associated with setting up a new business.
If you are a prospective franchisee looking to join a franchise system, or someone looking to set up a franchise system, then this announcement is great news for you. Your legal and accounting expenses will also be deductible if you want to change your existing corporate structure.
Many small businesses will have found themselves wanting to change their corporate structure, but the CGT liability that would accompany such a change prevents them from doing so. The Government has recognised this by announcing that small businesses will eventually be able to change their legal structure without incurring any CGT liability.
What is a small business?
A small business is a business with annual turnover of less than $2,000,000. In other words, the change will apply to around 97% of businesses in Australia.
A small business includes entities operating as a company, partnership, trust or sole trader.
When can you start claiming?
Various other organisations have announced that the deduction is available immediately. However, the ATO’s website indicates that the deductibility change applies from the 2015-16 income year, and is therefore not immediate. Further, the CGT liability change will not come into effect until the 2016-17 income year.
The changes are also subject to the successful passage of legislation.
Nonetheless, preparations should begin immediately in readiness of seeking legal and accounting advice from 1 July 2015 and to begin planning for future changes to corporate structures.